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UU Introduction to Economics and Business Economics - Summary for Hoover Text 'Applied Intermediate Macroeconomics (and the Real World)'
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Summary – Macroeconomics and the Real World – Hoover:Applied Intermediate Macroeconomics (). Kevin D. Hoover.
Typical problems of macroeconomics economic crisis (recession) fall of the GDP (per
capita) and loss of jobs rise of unemployment rate.
Macroeconomics fluctuations irregular rising and falling of the economy fluctuations
are a cycle.
Economic growth growth is a trend.
Between 1982 and 2007 (before the Great Recession of 2008), the real GDP more than
doubled and employment rose. Despite of the recession afterwards, the steps of rising
overwhelmed the backward steps.
Macroeconomics the study of the relationships between aggregate quantities the
economy taken as a whole.
Microeconomics the study of behaviour of individual economic actors part of an
economy.
Fallacies of Composition the assumption that what holds for a part must hold for the whole
as well what is true for the individual is not per se true for the market as a whole.
Goal of Macroeconomics to provide analysis of the economy (without fallacies of
composition).
Adam Smith’s Wealth of Nations modern economics is usually dated to this book but
Smith did not use the distinction between microeconomics and macroeconomics yet.
Industrial Revolution reconceptualization of business cycles these cycles became the
focus of economics different sort of analysis.
John Maynard Keynes’ General Theory foundation of modern macroeconomics (mainly
through government intervention) the terms micro- and macroeconomics were first used by
Ragnar Frisch and Jan Tinbergen (use of models / econometrics) new ways of analysing
the economy Kuznets, Stone and Clark provided basic data for analysis.
Positive Economics how things are (in fact) it describes and quantifies economic
developments and phenomena objective, fact-based data analysis.
Normative Economics how things be the value of economic fairness ideological,
opinion-oriented analysis / subjective and value-based.
In other words positive economics must account for the normative goals and actions of
policymakers this makes it clear that economics is a social science.
Options of Policies use policy to guide the economy or leave the economy to its own
device hereby it has to be considered that the government is part of the economy.
Human behaviour is studied using methods of the social sciences.
Rational behaviour social sciences assume that people adapt their actions to their own
desires.
Controlled experiments are (almost) impossible in economics it is not known how to
manipulate different aspects of the economy in the right way to achieve the right control.
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